Event: The ILUKA announcement will shut down the Jacinth-Ambrosia mine for 18-24 months from April 16, which will supply 25% of the world's zirconium demand.

Comments:

1, the global supply of zircon sand in the vicinity of 1.1 million tons, of which the top three leading accounted for about 65%, ILUKA accounted for about 32%. ILUKA2015 annual production of 389,000 tons (sales of 346,000 tons), up 8.7%. The cut production capacity is estimated at 250,000 tons in the vicinity.

2, the global demand for zircon sand in general is stable and down from 1.25 million tons in 2010 down to the current 100 million tons in the vicinity. Of which with the real estate-related ceramic emulsion accounted for about 50%, dragged down the consumption growth. China's consumption of zircon sand accounts for 50-60%.

3, the Australian ore zirconium price of 7550 yuan / ton (including tax), or 1,000 US dollars / ton (CIF prices), has maintained this level for nearly 3 years, is also in 2008 the level of the financial crisis.

4, to the inventory is closed mine main reason:

1) As of the first half of 2015, the company inventories + in the product value of 820 million US dollars, equivalent to an estimated 800,000 tons, of which zircon sand estimated at 450,000 tons (180,000 tons of inventory +27 million tons in the product, at a high level) , Corresponding to the Jacinth-Ambrosia mine production of about 18 months.

2) can improve the company's cash flow.

3) can improve the relationship between supply and demand, boost the downturn in market demand. In fact, ILUKA zircon sand cost estimated at 800 US dollars / ton in the vicinity, the current price is still profitable, but the inventory has been equivalent to six months of production, production is reasonable.

5, is conducive to the industry substantially to inventory. ILUKA although the cut, but the total global supply temporarily will not be a substantial decline. The biggest advantage is conducive to the industry to inventory, boost market confidence, it is estimated that the price of zircon sand 20-30% of the rebound space.